The reform of the electricity market mainly includes three aspects: establishing a competitive market on the power generation side, liberalizing the market on the power sales side, implementing a fair and open power grid under government supervision, allowing users to freely choose a power sales company, and creating a situation where users can freely purchase electricity. Since the implementation of the No. 5 Document in 2002, the plant and network have been separated, and the power generation side has established five major power generation groups. This has created some competitive players for the implementation of competitive bidding, but it has only done the basic work of market construction, real market competition, and market competition. The market competition of these most market essential characteristics of the share competition has not been established, and the power selling side still basically follows the past model of power sales.
In a perfectly competitive market, where the definition of property rights is clear and secure, there is no monopoly, and transaction costs are zero, its market equilibrium is the best choice for social welfare. This conclusion is the most basic conclusion of economics. To say that it is basic means that this is only a guideline for guiding reforms in many countries, regions, and markets; it is also a conclusion that is highly abstract and under very strict assumptions. In fact, in the real market, due to one or the other reasons, it may cause the hidden, high transaction costs of different forms of monopoly to be difficult to eliminate or the property rights cannot be guaranteed. In this situation, the market mechanism may not be effective. In addition, the reform of marketization and competition as institutional changes, the cost of the entire process is high. This includes both predictable system design costs, management enforcement costs, and regulatory costs; there are also a large number of potential risks caused by the risks associated with uncertainty.
Therefore, on the one hand, whether each market is reformed or not, and the path of reforms should be weighed against the costs and benefits of maintaining the existing system and the cost benefits of institutional reform. Only when the reform will bring real efficiency gains should it be promoted. On the other hand, in the process of reform, we should have a profound analysis of the object of reform, understand the steps of the reform, and proceed in a gradual and orderly manner; correctly identify the key to institutional design, try to perfect the design of the market, and reduce market failures that may be caused by various factors. Only in this way can the electricity reform not be aborted, and it can actually promote the overall social welfare of the market.
In China's electricity market, the plant network has been separated, but the administrative features of the power sale side are still strong. The crucial bidding network and its supporting transmission and dispatching policies are still at an early stage of exploration. Under such characteristics, it is still necessary to conduct extensive research and extensive discussions as to what kind of strategy for improving the economic efficiency of electric power in China's electricity market is actually adopted.
Nowadays, the call for deepening the reform of the power system to promote the construction of the power market is very strong. The power market construction and the reform of the power system are in great need of a professional discussion and conclusion on the basis of which the 5th document has not achieved substantial results in competition in the electricity market since the implementation of the document. The next step is to provide reference for decision makers to introduce more comprehensive and in line with national conditions policies and rules for deepening reforms in the future and to promote the sustainable development of the power industry. The use of an upgraded version of the electric power industry to support the development of the entire national economy has a long way to go.
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